The Crisis Of The Global Economy Essay - 2016 Words

The Banking crisis began in 2007 and despite the efforts of the central banks and regulators to restore calm, it continued and gathered intensity for a further year. By the end of 2008 and early 2009 the financial system and the global economy appeared to be locked in a descending spiral and the prevention of a prolonged downturn became the primary focus on government policy. This was a global crisis with many countries suffering a drop in GDP, negative growth, bankrupted businesses and banks and thus high unemployment rates. This crisis was a systematic failure in which many problems led to an eventual meltdown of the global economy. But how did the UK manage this crisis and what policies are we using in the current macroeconomic environment where there is so much uncertainty surrounding the UK EU referendum and the current election of President Donald Trump. As the financial crisis intensified the government sought to use a mix of monetary and fiscal policies in order to keep inflation around 2% and maintain positive economic growth. Monetary policy aims to control the money supply through the central bank interest rate. Fiscal policy is the way in which a government adjusts its spending levels and tax rates to change the level of output in an economy. Both policies effects can be shown using a IS-LM diagram. Figure 1 IS-LM Model The IS/LM model, shows the relationship between interest rates and real output in the money market and goods services market. WhenShow MoreRelatedGlobal Economy : Global Economic Crisis1249 Words   |  5 PagesGlobal Economic Crisis Introduction Trade among countries has been an important accelerator of economic growth. It has created employment opportunities for many people in the world. However, due to this trade-like financial openness the economy is exposed to external shocks. 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The Brazil government policiesRead MoreThe Global Financial Crisis Hits The World Economy2301 Words   |  10 PagesGoing global was common for almost every company out there, until the year 2008 when the global financial crisis hits the world’s economy. The global economy since then entered into a new phase of globalization, known as ‘guarded globalization’. Developing nations began defending their local industry, and became more cautious when allowing multinational companies to operate in its soil (Bremmer 2014). They heightened their national securit y, recognizing the importance of more sectors and taking measurementsRead MoreGlobal Economy Is Finally Stabilizing Following The Global Financial Crisis And Great Recession1084 Words   |  5 PagesThe global economy is finally stabilizing following the global financial crisis and Great Recession. 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In the meantime, the credit crisis broke out due to the fact that the large number of using credit card is beyond the self-repayable ability, thereby formingRead MoreThe Big Picture By Award Winning Authors That Offer Great Insight Into Th e Reason Behind The Global Economy Crisis1402 Words   |  6 PagesThe Big Picture is a book by award-winning authors that offer great insight into the reason behind the global economy crisis. The book offers insight into the ways in which one can navigate their way into being successful economists where competition is stiff and the uncertainty of what the market could be tomorrow are a serious challenge. The authors give a clear pathway on how consumers, businessmen, federal reserves and the governments should take account of what is happening about them in orderRead MoreEurozone1735 Words   |  7 PagesOn November 1, 1993 the fate of our economy was decided. After one half of a century of waiting, the Eurozone came to a solemn existence. The once great powers of the world, the European nations, had completed a risky, and perhaps foolish, task. The world’s first regional economic system was successfully created. Now, almost two decades later, the world’s economies are on the verge of collapse, and it seems that no economy, other than the Eurozone, is at fault, due to its recent and quite careless